The world’s economic advance is increasingly spearheaded by the great cities of the world. Europe only has two of them, London and Paris (and there is Moscow). The USA has several, whilst rising Asia is pitting its traditionally successful city states against a new tide of fast growing cities in India, China and elsewhere.
If we look at the OECD list of richest regions in the world as measured by GDP per head, it is led by London (Inner west) at a mighty $152,116 a head. The District of Columbia around  Washington USA comes second, at $131,343. Paris is the best of the continental cities, at a very successful $76,146 for the city as a whole. Edinburgh appears high up with $49,970, parts of the UK Home counties do well and Inner London east is there at $47,470.
Germany is not well represented. Its best performers are Hamburg and Munchen at  just under  $47,000.
It is another way of looking at the German/UK comparison we tackled yesterday. If the successful world model today is the large conurbation that attracts people of all types and languages to bring their skills, energy and money, the UK , US, and France have what it takes and Germany does not. To succeed a world city needs to encompass a population of around 10 million in the city proper and close surroundings. It needs to be very open to talent and money from outside. It needs to have premium properties available for foreigners to buy. It needs a  great ambience, plenty of good high specification modern commercial space, and preferably some iconic older buildings and symbols of the city. It has to have great food, great drama and music, great art, and generally great entertainment.
Some object to this model of development. The gaps between the typical income in say central Paris, and poorer rural France can become very large. This is, however, no greater a gap than that between the eastern regions of united Germany and the richer south west. Mr Hollande’s attempts to curb the inequalities by imposing higher taxes on the successful has led to difficult court challenges and to a big exodus of well paid people, reminding him that if he wants France to keep one of the world’s great cities it has to understand the need to remain competitive.
August 11, 2013
All very true is one is only looking at pure numbers, but then when one only looks at pure numbers we get daft things like CDS and sub-prime mortgages etc, on paper they should have made a lot of money, but in reality… Also, income is not the only measure, only the USA and UK seem to be obsessed income, as if that alone makes for a quality of life.
There are more ways to measure success than GDP, just as there are many ways to proclaim “City” status, in the USA just about any town over a certain size seems to be a City were in Europe the location would need to satisfy more stringent conditions, whilst not true a City used to be only found if there was Cathedral, even today City status has to be awarded – thus any comparisons between “Cities” is a bit meaningless as one could actually be comparing an otherwise Town.
August 11, 2013
Oops, that should have read …whilst not true today, a City used to be only found if there was Cathedral present…
August 11, 2013
Dear Jerry
Please supply a list of Towns with a greater population of approx 10 million
Or did you not read and understand John’s piece?
Just so you know sub prime mortgages DON’T work in terms of numbers they are a political construct and the mortgage backed security market was an attempt to mitigate the fact that they dont stand up
August 11, 2013
libertarian: It is you who doesn’t understand the meaning of a City, the population figure is irrelevant to why a City is a City (and why comparing one “City” with another is meaningless). As for Sub-prime, indeed, hence the invention of the CDS and the like, to try and make it look better on paper – that was my point!
August 11, 2013
Jerry
No you’re wrong. The article isn’t about WHAT constitutes a city its about the financial and economic conditions surrounding a region and which make that region economically successful .
I think you are just eristic.
A credit default swap is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a loan default or other credit event. The buyer of the CDS makes a series of payments (the CDS “fee” or “spread”) to the seller and, in exchange, receives a payoff if the loan defaults. It was invented by JP Morgan in 1994.
Its essentially an insurance product and is a protection rather than a selling aid. It was the insurance company AIG that got hit by CDS problems. They miscalculated the risk of providing short term collateral and also sold the instruments at fixed market prices, whilst traders where trading CDS at prevailing prices.
August 12, 2013
@libertarian: The point you miss is that John is COMPARING “cities” (based on population size) with UK Cities (so designated because of the presence of a religious building or some other factor [1]), thus the comparison drawn are poor and thus make the worth of the article questionable – if for no other reason than there are far less Cities in Europe than there are in the USA because of the way the “city” status is created. As I’ve said elsewhere, one of the UK’s largest and most successful companies is not and never had its head office in a City.
[1] for example Brighton & Hove Wolverhampton and Inverness all became Cities not because of population size, nor because of a religious building but an Act of parliament
Reply I am talking about large urban areas, not the definition of city status.
August 13, 2013
@JR reply: “I am talking about large urban areas, not the definition of city status.”
If so then it is wrong to say “Europe only has two of them, London and Paris (and there is Moscow).”
You are either talking about Cities (and thus the definition) or you are not! If one read “urban area” for city and disregards the above comment about London and Paris etc, your blogs is a far more balanced piece…
August 11, 2013
“… sub prime mortgages DON’T work in terms of numbers … the mortgage backed security market was an attempt to mitigate the fact that they dont stand up … ”
I thought it was a device to enable those who originally granted them to get themselves out from underneath them before they fell down.
August 11, 2013
Denis
Mortgage backed securities were traded long before the sub prime market came to the fore in fact Ginnie Mae guaranteed the first mortgage security in 1968 Fannie Mae issued the first modern style MBS in 1981
Private mortgages were only granted permission to be securitized in 1971 and the federal government set up Freddie Mac to oversea it.
From 2011 on mortgage backed securities have become a major profit centre for most US investment banks.
August 11, 2013
Sorry Jerry and Denis
In my original post I meant Credit Default Swaps were and attempt to mitigate the sub prime problem not MBS’s
August 11, 2013
Libertarian I noticed that you ignored everything Jerry said and instead constructed a straw man. In the UK a town cannot become a city simply because it has a large population but has to officially be recognised as a city (a few years ago there was some criticism on this blog when England, Scotland, and Wales each had one town turned into a city, even though England had more towns). By contrast in the USA all you need is a large population for a town to become a city.
Also the sub prime mortgage backed security market failed because banks tried to sell worthless mortgages as triple A mortgages. Had they not been so greedy then the mortgage backed security market wouldn’t have collapsed.
August 11, 2013
Uanime5
Yes I ignored Jerry for the simple reason the piece isn’t about what constitutes a city, its about financial and economic clout
You have no idea about mortgage backed securities which were an investment derivative long before sub prime mortgages
August 12, 2013
@libertarian: Thanks for admitting you failed to understand what John was talking about and why some of us are disputing the use of the word City in the blog [1]. The economic clout you talk about doesn’t need to be centred on a “City”, some of the UK’s most successful companies (for example GSK) do not even have their HQs in Cities but ordinary British towns. I can only assume, like you, John was using the US meaning of the word “City” – a town that whose population is over a set figure – that in a UK (and European context) puts a completely different slant on the whole blog.
[1] are you in or from the USA, if so that might explain?
August 12, 2013
Just because mortgage backed securities existed before the 2008 financial crisis doesn’t change the fact that they were responsible for this crisis. I suspect you’re criticising me because I pointed out the crisis was caused by uncontrolled capitalism, rather than socialism.
August 11, 2013
The CDS and sub prime mortgage usually did not work in terms of the numbers, that and the inter relationships and duff warranties involved was the problem. They were often just used as a way of selling worthless pieces of paper, cleverly dressed up, to dopes & fools. That is quite rather profitable business as paper is very cheap (even triple A paper posh ink) and now, with IT, you do not even need the paper just a good story and someone credulous.
August 11, 2013
Why this fixation with large Cities ?
Yes, have successful cities by all means, but is it not better to have a wider spread of wealth and opportunity throught the Country.
Why concentrate all of the wealth in small areas, which leads to transport and housing problems for those millions who want to work and live in such places.
Of course large Capital City centres will always tend to be the Centre of Government with many major Government buildings, museums, theatres and the like, and yes major commercial businesses have tended to gravitate towards such places in the past, but why put all of your eggs in one basket.
August 11, 2013
Indeed governments move a lot of wealth away from the producers of it, into London, Edinburgh and even Cardiff with lots of largely parasitic, yet often well paid jobs, in government, lobbying, the legal profession, the BBC and media, tax officers and the regulatory professions.
Reply London moves a lot of government jobs out of the capital to lower cost areas.
August 11, 2013
These cities also have the huge advantage of English (though Cardiff still likes to ram Welsh down its children’s and TV viewers throats (at tax payer expense) for some bizarre political reason. Despite this only about 19% claim to be able to speak it. Lots of expensive signs and translations to pay for too.
August 11, 2013
@Lifelogic: “though Cardiff still likes to ram Welsh down its children’s and TV viewers throats”
Not political but cultural reasons. LL, you really are an over opinionated philistine!
August 11, 2013
I have no objection to people studying Welsh, Mongolian, Swahili, country dancing, bag pipes or anything else they want to. I just do not think it should be rammed down peoples throats often against their will and at the tax payers expense.
I read that Cameron is now to spend millions (80?) on cycling in Cities. An activity that can, in cities, be some 50 times more dangerous than taking the car. It usually means taking perhaps 50% of the road capacity and giving it to the circa 1% of people doing bike miles (users who do not insure nor pay anything for the roads). The effect is to cause pointless congestion and costing people a fortune in extra fuel and wasted time. Try Bristol for an example.
Surely the government should set a level fiscal playing field for transport and let people decide what suites their needs.
August 11, 2013
Perhaps opinionated, but then it is boring not to have opinions and telling people the truth rarely makes one popular.
The Welsh would be far better teach off teaching their children Mandarin & Spanish than Welsh but each to their own. I just do not like the government compulsion element.
Philistinism I see describes the social attitude of anti-intellectualism that undervalues and despises art, beauty, spirituality, and intellect, ignorant, ill-behaved persons lacking in culture or artistic appreciation, and only concerned with materialistic values.
Not me really at all, never happier than when walking on the cliffs listening to Bach, Wagner, Vaughan Williams or something.
I just dislike the idea of governments taxing us and then using the money to ram their silly religions & ideas of culture down us. Though I must admit to disliking all those endless silly, lefty, arts council funded, actor types with their silly, facile, half baked opinions.
August 11, 2013
Well said life logic.. The government is still trying to prevent the rest of the EU from getting its hands on our tax from the city by taking the EU to court. At our expense of course. If the Tories have their way (ie Cameron) the UK will be part of the EU superstate so the points made in JR’s blog are irrelevant. Perhaps the government could concentrate on road building to help its mass immigration policy rather than the stupid HS2 project to fulfil the EU aim of having main links to each EU city. Instead of the Lille loophole which was reported that May tried to hide this week we would have illegal immigrants going straight to Manchester at extra fast speed!
Pickles has made the point about EU birth, marriage and passports so we are brainwashed to believe we are all EU citizens, oncemore, eroding nation states by stealth.
August 11, 2013
To reply:- Perhaps better move the jobs to India or similar (where the jobs and real jobs) rather than the artificial, contrived & parasitic government ones that should just be stopped.
August 11, 2013
In the current UK economic situation the last thing we should be doing is exporting jobs. We need to attract more jobs back into the UK. Our larger cities should be acting as a magnet to this activity. However we also need government activity to encourage jobs to stay in and migrate to the UK. A high priority should be the reduction of employers’ NI contributions.
We should be taking advantage of the high property prices paid by affluent immigrants by introducing higher bands of council tax. It is essential to tax them indirectly as they find so many ways of avoiding income and other direct taxes.
August 11, 2013
Well we all in the end get richer by doing things where they can be done most efficiently if that is India so be it. People in the UK would often be better employed doing other things building and repairs perhaps.
I would however stop paying them just to do nothing as now.
August 11, 2013
behindthefrogs ,
Council tax is supposed to contribute towards providing services in the area .
Rather than increase it , better to levy a location value tax LVT) across the whole country as a fee for exclusive use of the commons in order for society to capture some of the rental value of the land so employment doesn’t have to be taxed to the same extent .
For the average person
August 11, 2013
You forgot the City slickers in London and Edinburgh churning and charging pensions, upping insurance charges to existing customers etc. and fleecing the rest of the country.
August 11, 2013
Indeed this goes on alot. Keep good control of your own investments and pensions is the lesson. Alas the fiscal system tend to restrict this.
August 11, 2013
Well noticed!
Historically large capital cities have indeed been centres of development. London and Paris, Baghdad and Rome, Athens and Florence.
What is surprising is your astute remarks about Germany. I would have assumed that Berlin, Munich and perhaps Bonn would have been well up there.
August 11, 2013
Germany’s wealth is spread more evenly within its regions although the Eastern parts will naturally take time to catch up.
zorro
August 12, 2013
Surely this is an important point. Although successful cities are likely to grow and become rich, it does not follow that big rich cities are a necessary requirement for success, as John seems to be suggesting.
Although Germany does not feature in the “rich cities list”, nobody is suggesting that Germany is not successful. On the contrary, everyone seems to accept that Germany IS successful. So the wealth in Germany must be distributed more evenly across the country. Isn’t that a good thing?
Perhaps the rich city list is just propaganda, distributed by those who live and work in those big rich cities, to promote the rich city model and thus protect their own interests. Because if those in positions of power (in the UK they are usually based in London) continually promote investment in London by insisting that business is not interested in investing in say, Manchester or Leeds (the usual argument is “unless we put all our effort into promoting London the business will go to Frankfurt or Paris”) it’s a surefire way of making sure London stays rich. The rest of the country hardly gets a look in!!
Yet if Germany can be successful without the enormous social division that comes with big rich cities and outer wasteland, why can’t the UK? Which model is best for the UK as a whole, rather than just London?
August 11, 2013
A question may arise: how can Germany have such a vibrant economy, while it lacks a spearheading metropole like London, with its10 x as many fat-cat bankers and multiple attractions?
Maybe conurbation should include wider areas such as the Rhine-Ruhr area? Wikipedia tells me that I live in a 7 million Dutch conurbation called “Randstad”, and with over 160 nationalities in Rotterdam and Amsterdam, Randstad must have some attraction for international business. As in the 21st century, people care about living conditions as much as about wealth, the attraction of spacious living may in future beat the very cramped living in compact cities like Paris.
Reply Yes I think a case can be made to say that the large Dutch urban area does act as a driver and magnet for investment, jobs and growth, based around a successful port/airport and trade based strategy for earning a living.
August 11, 2013
Yes, I liked staying in the Old Zuid part of Amsterdam a few years ago. It is more important to have good living conditions rather than cramped cities.
zorro
August 11, 2013
London does well but largely of the back of incoming millionaires with overseas investments who only have to pay ÂŁ30,000 – ÂŁ50,000 per year in taxes if they structure it well. The UK’s home grown rich have more like 50% of their income taken of them each year, plus 40% on death too. Some tax cap for these circa ÂŁ100,000 would be a very good plan for UK growth.
It is also a question of lifestyle, if you live in a rural area you may not need much money to live perfectly happily anyway and with a better supply of rural properties is could be even cheaper still. There is plenty of rural land after all but reserved for pigs, sugar beat potatoes and pointless wind farms it seems.
Whereas if you want all the buzz of the city, a big house, restaurants, theatre, opera etc. you clearly do need money.
It is not some much the city that generated the wealth as the city is where the wealthy (often nondoms) choose to live and manage their millions.
August 11, 2013
Foreign millionaires only pay 30 -50k tax but pay more than domestic ones paying much more? There must be a lot of them to do this? Many non doms pay no tax and are hoarding their wealth in London property without living there. Do tell us how this benefits Britain? It’s like holiday homes on a larger scale. No they do not contribute to society when they only pay a maintenance company and often even avoid council tax. You have to ask yourself why they are here and how they benefit from Britain by paying so little tax and making little contribution to the economy. Why are rich Russians here and not in low taxed Russia in your apologist fantasy? I’ll tell you. Political stability and safety from the Russian state. They
Property may well be cheaper in rural areas everything else is the same price and transport more.
August 11, 2013
How do they avoid council tax pray tell?
August 12, 2013
Their security arrangements and the councils lack of will to pursue them.
August 12, 2013
How do they avoid council tax? They rent their houses at exhorbitant rates to our young professionals.
August 11, 2013
Tax inequalities are vulgar. If I wanted to rent my house out , it would cost be 40% tax due to unearned income, 20 % VAT ,the letting agents fees, leaving me approximately 20% for repairs plus the stress of others damaging my property. This is irrespective of the small amount I am expected to live on , having put a life times work into serving the people of my own country. What is more they keep banging on trying to get more and more. The cost now of insurance to work is a sixth of my total yearly earnings and this is less than half of some on full benefits. So when you speak of $152,116 per capita it is just a tad hurtful.
Cities as you rightly say do need attractions and perhaps our biggest attraction is our historical heritage , the Royal family and its trappings. It is all a little ‘Alice ‘ but then if it wasn’t, no one would be interested. Cities on the other hand are developing out of London and the wealth is becoming disseminated .London is becoming upset that Manchester , Birmingham and other cities are becoming successful , yet living prices are not as high. Manchester attracts much foreign investment and has a wealth of history in all the elements you mention in your article.
City breaks demonstrate the appeal of cities still , yet urban interest is on the move as properties are being bought by the survivors of our latest recession and the greener aspects of life are becoming ‘ the attractive’.
The demographics are changing and one small area of any country will not reflect the whole .The mutability of places of high importance in any one country is demonstrated by the Saxons, the Normans , travel opportunities and now the immigrants and a determination to deny our heritage as important. This will eventually morph our cities.
Reply The people I know in London and all the MPs are very keen to see Manchester, Birmingham etc flourish and get richer.
August 11, 2013
What these data also highlight is the absurdity of pursuing ‘equality’ as an end in its own right. You can have more equality through policies which get rid of the rich people who make up these stats. Is the country in question then better off? Anyone who thinks so should spend some time in poor but equal countries.
August 11, 2013
Unequal countries are often poor and believing in the trickle down effect is for the birds and fools. You think it good that a small minority are super wealthy and the majority are poor with a minority dirt poor? There can not be British peasants so something has to give.
August 11, 2013
No Bazman that isn’t what I said. what I said is its better that everybody is richer even if it means more inequality than that everybody is poorer in order to achieve equality. Take your next summer holiday in North Korea and come back and tell us how equality feels.
August 12, 2013
Studies have shown that inequality is not the way to advance society and unequal societies tend to do worse. North Korea would be one of the most unequal societies by default.
August 12, 2013
It’s impossible for everyone to be richer while increasing inequality. In real terms those at the bottom will end up being worse off because mores services will be outside their price range.
Also North Korea isn’t an equal society as the average person doesn’t have living conditions comparable to their rulers.
August 11, 2013
Richard–It is the same old story viz making the rich poorer won’t make the poor richer–much more likely it’s the other way round (rich richer makes poor richer too). Just another manifestation of the desire in some quarters that we all become identical and homogenised. This ain’t gonna happen: people have different capabilities and desires. Personally I go in to London (where I was born and bred) once a year max and only when I have no choice. I realise that some “adore the drama” for instance but count me out.
BTW why does the Tory leadership need election gurus to explain the blindingly obvious to them (eg that Labour are vulnerable on Welfare and Immigration and the EU)? If such is not obvious to them what are they doing in charge?
August 11, 2013
JR a couple of these cities that you mention are very dependent on state aid. Where would Edinburgh be if someone pulled the plug on RBS and HBOS? Also how much is DC and suburban Virginia/Maryland dependent on the federal government? With regard to London how much of this is hot money and which will fly just as quickly away when the plates stop spinning?
Who wants to live in a “world city” anyway? Give me Munich anyday over London, it too has flash shops, Bayern Munich, world class art galleries, big name employers like BMW and you can get to the Alps in less than hour …..
August 11, 2013
Dear Emporer Marcus Aurelius Redwood. c/o Palatine Hill, Rome. 282 AD.
(1) Just to let you know, your post did not go well here, the Germanic hoards are massing.
(2) Breakdown of the imperial system of frontier defense; Germanic raids throughout the western portions of the empire.
(3) Diocletian reckons he is taking over as emperor and is planning sweeping reforms to the imperial system.
(4) Plans to rename the Roman empire as The European Union.
Pax Romana
Maximus Decimus Meridius
PS Watch out for the boy Commodus, he has got it in for you.
PSS Single currency going well. Metric weights and measures a big hit with the locals.
PSSS Suggest if we ever do this empire thing again, we stick with English and not Latin
August 11, 2013
A very cryptic post Acorn, a little wayward with your chronology though….I’m sure that John will be happy to be compared to Marcus Aurelius (the Philosopher Emperor) rather than Tiberius for example….
zorro
August 11, 2013
Maximus–Yes I suggest forget Latin. Post postscript etc = PPS, PPPS etc not PSS etc and it might be defence nor defense (forget the American spellchecker) not to mention hordes rather than hoards
August 12, 2013
We made it up over one cup of coffee. There was no Maximus Decimus Meridius, as I am sure you are aware. I know nothing about Roman Emperors.
The response was prompted by a suggestion that if you were going to create the European Union with a single currency and a standardised structure of local government, with a clearly defined management structure to go with it.
August 11, 2013
London does have a lot of jobs, great buildings, restaurants etc and so attracts many people.
I would question your point about “premium properties available for foreigners to buy”. I wouldn’t call most expensive London property premium, a lot of it is rubbish! Just that supply is constrained and monetary policy is loose and it is used as an investment tool rather than for homes.
Do you not think it would be healthier if Manchester and Newcastle and other towns were successful too, based around more small companies. I am not sure everything being based around one overcrowded area is wise.
I believe that law firms, accountancy firms, hedge funds and investment banks are not the route to sustainable prosperity. Where they provide services to those abroad and bring money in fine. But these sectors are very government dependent. Much of finance requires cheap central bank money. No ordinary person gets the interbank overnight rates!
The taxing and regulating to death of small business also leads to a situation where only big chains of restaurants, shops etc can succeed in most of Britain. This leads to more super rich at the expense of others and those at the top will obviously enjoy living in central London.
I do agree with much of what you say, but I feel you could be more critical in how much of our economic growth and wealth figures come about. It doesn’t strike me as sustainable
Reply The most expensive homes in London are very dear – far too dear for a normal UK taxpaying Brit – but they are also often spacious and beautiful.
August 11, 2013
Even more spacious if you can get planning permission to double the size underground. Interesting as to the reasons why they want to do this isn’t it John?..
Reply In a crowded city with terraced houses and high Stamp duties expanding down and up is often the cheapest and easiest way to create the extra space they want
August 11, 2013
David Hope ,
Is the importance of having quality housing available for the super-rich to BUY not being overestimated ?
I know one super-rich hedge fund manager and the sort of people who can afford to buy in the nice parts of London are not as obsessed by property ownership as the rest of the UK and are often happy to rent .
They often have bolt-holes all over the World too .
Pure “investment bank” activities – services which derive fee or commission income ARE imho compatible with creating wealth and are not incompatible with retail banking . They provide a socially useful service .
I would argue that any attempt to call the following “investment bank activities” should be challenged . Call the casino bank activities if you like :-
– selling or buying synthetic CDS i.e. CDS to parties which cannot demonstrate any insurable interest or exposure to a default or selling CDS covering multiples of the party’s exposure to a default . Both of these fail the insurance principle of betterment and are considered fraud in an insurance context .
– large scale proprietary trading of securities on their own account .
Any organisation which engages in the above should have their banking license revoked and be recategorised as a hedge fund .
Reply Banks tend to be the counterparties of derivative transactions.
August 11, 2013
I’d probably agree with those points. I am not at all against investment banking in principle. But it has, it seems to be become a very inward looking area. It’s no longer about, for example someone trying to protect their business against increases in the price of grain. Seems to be just banks interacting with banks, backed by government. The recent case of Goldman’s (with the LME) ensuring nothing ever leaves the warehouses they own (at least not for a good year!) kind of sums it up.
In hedge funds the algorithmic trading battle is not especially economically useful and creates a lot of instability and bigger swings or small market changes. That said, many of the funds do bring in quite a lot of foreign money from all over so it isn’t all bad and at least the hedge fund sector is quite competitive unlike banking.
August 11, 2013
Understood .
I’ve got no problems with banks providing derivatives products which are socially useful .
I do have a problem with banks offering derivative products which serve no usefulness beyond gambling and speculation .
There is a place for that sort of thing but it is not the banks , it is the domain of accountants and financial spread betting companies .
The whole thing reminds me of Sergeant Bilko where it doesn’t matter one jot whether the gambling is on share prices or horses .
Unfortunately in real life it does matter and betting on horses is less damaging than the speculation and manipulation orchestrated by The City .
One has to wonder about the usefulness and desirability of even understandable products like index-tracker funds .
Either the fund purchases securities in which case the price gets driven up and the return for anyone who buys in at that price reduced (though helps keep companies in indices like the FTSE top 100) or they synthesise a virtual holding of the securities . Either way no new wealth is created .
August 11, 2013
Omission : TURF accountants .
August 11, 2013
Quote JR : “The world’s economic advance is increasingly spearheaded by the great cities of the world. ”
– the main economic advances which London has spearheaded have been towards economic decay , money laundering , tax evasion through support of secrecy jurisdictions , moral decay , usury and debt peonage for everyone else .
These things are shameful , nothing to be proud of .
Your political class has helped them . You were meant to be representing the interests of all constituents and the whole country . Instead you reconfigured the UK to comprise : Northern Ireland , Scotland , Wales , England and London .
London is full of big law firms , patent lawyers , big consultancies (etc ed) which specialise in stifling competition and innovation and have an undue input into Govt policy . They are the antithesis of real business .
Quote JR : “If the successful world model today is the large conurbation that attracts people of all types and languages to bring their skills, energy and money, the UK , US, and France have what it takes and Germany does not.”
That is an enormous ‘IF’ .
Germany lacks the big cities and has fewer multi-national corporations than the UK but has a much more balanced economy than the UK .
Germany has successfully absorbed the merging of West Germany and East
John , the City of London provides many essential socially useful services like insurance but the exotic financial instruments London pushed for the last couple of decades have had their day . They are on their way out never to return .
Unless the City of London proactively reinvents itself into something which is socially useful and lets the other stuff go it will be dead in the water .
Don’t underestimate the delayed backlash against what they have been doing over the past couple of decades .
It’s time to face the facts John , the City of London is in terminal decline as evidenced by it’s marketing drive to attract oligarchs (and various alleged criminals the poster does not like ed) .
The UK must stop trying to flog the dead City of London dead horse and the housing market dead horse and foster some new wealth creating rather than wealth appropriating industries .
Reply There are many great businesses and succesful people in London- you are relentlessly negative like some old fashioned preacher prophesying the end of sinful mankind
August 11, 2013
I might be relentlessly negative but you seem to have an unbalanced view of the City of London and finance sector too .
The writing is on the wall for the City of London and it is only a matter of time .
August 11, 2013
And I presume, adSimon, that you feel a good long dose of hard left socialism would cure all the problems you feel are afflicting this fine country.
Is there a nation on Earth you would find it preferable to live in instead of the UK?
August 12, 2013
Edward2 ,
I am a capitalist Edward2 .
It’s just that I prefer real capitalism rather than crony variety and rent seeking which prevails now .
Plenty of real capitalists are in favour of shifting taxation from employment onto monopolies like land as evidenced by Churchill’s own support of land value tax .
It’s the City of London and people who defend it who are ruining this fine country .
Not even Osborne and Cameron believe The City is the Jewel in the Crown anymore . Oliver Letwin wasted no time in giving them his prognosis for the City after their recent election “win” if you can call it that .
All it’s done is flooded the market with credit to puff house prices to such a level that the finance sector appropriates the lions share of the fruits of peoples labour over their lifetime in mortgage interest .
By puffing land prices it has pushed business premises cost up to the point where it is an issue for small companies .
On an annual basis the amount of money paid out by private pensions is less than the amount of tax relief given on them .
Private pensions don’t work and can’t work yet successive govt’s force the people they are meant to be representing into the clutches of the financial services industry .
Don’t grumble about any of the above when any money you make is taken away to pay housing benefit and means tested old age benefits to those in poverty .
August 12, 2013
Well capitalism brings its excesses ADS and you have described several examples.
However what goes up will one day come down as demand and supply move towards equilibrium and the bubble bursts.
Rent seeking is a by product of the huge recent increase in population and the reluctance to build sufficient new housing to meet demand.
Pensions do work for millions and would be working better if the Government hadn’t intervened with negative changes to taxation.
Instead we now have at two tier system where the good pensions and early retirement schemes are almost entirely in the public sector.
I think on property you have to look outside London, for a more realistic picture, where Middle Eastern, Chinese and East European new wealthy are able to buy at almost any price and distort the market.
But even in the buoyant Midlands houses can be found for well under ÂŁ100,000 and a mortgage is cheaper than renting.
So I am not as pessimistic as you and history has shown the City of London has weathered far worse dangers over the centuries.
August 11, 2013
Many a song has been wrote about Newport City in Wales with it’s fantastic wealth, climate, famous people and opportunities. Motto: “Terra Marique” “By land and sea” Alica Keys sang about Newport and Shirley Bassey was born there. Frank Sinatra’s Newport Newport is my favourite as it can can be sang from the floor. I feel a song coming on..
August 11, 2013
I’m not so sure about this John. One of the worst aspects of city living is the commute to and from work. Not only is this often a draining 2 hour daily grind, it is also horrendously expensive. There is probably an average of ÂŁ5000 pa that you could take off your figures, even before we look at costing commuter misery and time. But even this is not enough. Public transport is subsidised by at least 50%. So the true cost of the journeys is ÂŁ7500 per person by my example. And this has to be financed by post-tax income.
I believe companies in London should pay for their workers fares – and at a non-subsidised rate. That would soon shift the balance away from artificial growth of cities to a fairer and more even distribution of wealth and employment over the whole country. Companies would want to move to areas where the commute is more cost effective. And if companies had to pay the real cost of break-even point on HS2 journeys for their employees the coaches would, rightly, be empty. Without ridiculous subsidies and artificial public sector concentration in London, the nation as a whole would be better off, and London would be smaller, not bigger.
August 11, 2013
Frank Salmon ,
Whilst the rail network is subsidised , the main lines into London are well utilised , perhaps to the point of being unsubsidised .
I’m all for moving Parliament out of the cesspit which is London .
August 12, 2013
The Tube is apparently subsidised to the tune of ÂŁ1 billion per year. Whilst London fare payers may pay more as a proportion of the bill for rail, the set up is complex and so we can only say with certainty that there is a subsidy and that it distorts the market – skewing resources in favour of rail use and creating bigger cities than would otherwise be the case. If there was more transparency and less subsidy we could move to a more optimal level of provision – better for the economy and better for those who do not want to live in the metropolis.
August 13, 2013
Look at senior renumeration, bonus rewards plus the contracting out success and failures.
Look at offshore financing arrangements, leverage,interest payments, tax avoidance even in the public sector or those companies dependent on public contracts.
Its called deep capture.
August 13, 2013
Frank Salmon ,
We have cases where the taxpayer compensates communities where wind turbines are located and some sort of ill conceived sweetener for communities in which hydraulic fracturing takes place .
You can bet that those same people who were pushing for HS2 will be buying plots of land in it’s way and submitting planning applications to increase it’s value in order to stiff the taxpayer by maximising compensation .
The banking industry offered to pay for the extension of the Jubilee Line out to Canary Wharf .
What happened instead was that it was built with public money and location value near all the of the new stations was massively increased .
Since the taxpayer is expected to subsidise activities which lower location value , there should be some form of location value tax so that the nation as a whole benefits when collective activities increase the value of the location , not just those businesses which are located nearby .
August 11, 2013
Bearing in mind that we were significantly responsible for reducing most German cities into infernos of smouldering rubble and (killing many ed) of their inhabitants, these comparisons are somewhat invidious. Berlin has only been wholly in the Federal Republic of Germany for twenty odd years whilst being precluded from being its legislative capital, so it is hardly likely to have developed on a par subsequently with those capitals which orchestrated its destruction. No doubt such was essential in order to achieve victory for (words left out ed) a brave new world in which European peoples are (Europeanised ed)ed out of any potential nationalistic mindset whilst being substantially excluded from the great cities that their forebears created in order to make way for international cosmopolitan spivs.
etc ed
August 11, 2013
The problem with having great cities is that most of the high paying jobs are located in a small area, so everyone has to live in them or around them. This results in heavily overcrowded cities and large areas of the country with high unemployment. In many cases it’s far better to have a lot of small industrial centres around the country, rather than one large industrial centre; which is probably why many European countries score so low on a scale that rewards centralisation.
Regarding Asia I suspect they score highly because they’re probably concentrating all their efforts on industrialising a few specific cities, while ignoring the rest of their cities.
Why do foreigners need premium properties? I guess if you’re trying to attract foreigner as director they may require high level accommodations but it won’t benefit foreign engineers or scientists.
The court challenge in France was due to the higher tax rate causing disproportionate harm to households with one high earner as they could end up paying a higher rate of tax than a household with two lower earners. Similar objections were raised regarding the Conservatives’ plan to remove child benefit from a household if one earner was earning over ÂŁ60,000 but not in households where the combined earnings were ÂŁ99,000. The only difference was that in France it’s possible to challenge almost all Government decisions.
Finally just how many people have left France in this “big exodus” and where have they gone?
August 12, 2013
“Why do foreigners need premium properties? I guess if you’re trying to attract foreigner as director they may require high level accommodations but it won’t benefit foreign engineers or scientists.”
Scientists and engineers also like a bit of luxury too Uni.
August 11, 2013
I shouldn’t read too much into the OECD figures for inner London West or East. As others have mentioned, Teresa’s or that are pretty obvious. The same can be said for Washington which is actually a small city but almost entirely dependent on the largesse of federal government deployment and spending.
zorro
August 11, 2013
reasons for that are pretty obvious
zorro
August 11, 2013
Unfortunately of the cities you single out all of them – London, Paris, Washington & Edinburgh are capital cities, ie magnets to top civil servants and the leaders of large companies that want to schmooze them. Washington in particular has no raison d’etre outwith government. This is not a model that has general applications.
From this list of the top 25 I have extracted those that are not capitals of hinterlands
http://www.aluxurytravelblog.com/2013/05/15/the-wealthiest-cities-in-the-world/
(Singapore is capital only of itself)
2. New York – 389,000
5. Frankfurt – 217,000
7. Osaka – 190,000
8. Hong Kong – 187,000
9. Shanghai – 166,000
10. Singapore – 157,000
12. Munich – 130,000
14. Los Angeles – 126,000
15. Toronto – 118,000
16. Chicago – 107,000
17. Sydney – 104,000
18. Houston – 103,000
What do they mostly have in common – fairly entrepreneurial, good rule of law mostly ports, perhaps tending towards good weather but not overwhelmingly so, several but not all have famous opera houses or museums, ethnic peace though not homogeneity, all cities people have heard of, cleanliness.
If anybody can think of other common factors I would be interested to hear of them.
When looking to see how a city can be successful it is worth removing the most common feature (being a capital) to see what common features remain.
August 11, 2013
The English language, legal systems/historical connections are well represented in the list.
August 13, 2013
Thank you lifelogic that is a useful point. 8 out off 12 English speaking is impressive. Another datum that suggests Britain could be doing very well if our political classes would simply allow it.
August 12, 2013
It would be interesting to know how many of these cities have their own dialect that’s unique to this city. If a large percentage of them do then the reason for their success may be to do with the community in the city or that the people in the city mainly interact/trade with others in this city.
Though for comparison other large cities will need to be examined to see if they also have a unique dialect.
August 11, 2013
London is a global brand, that’s the main point.
A foreign company might do just as well to relocate to Basingstoke, but Basingstoke in not a global brand.
August 12, 2013
Maybe we should expand Old Trafford? 🙂
August 11, 2013
Most of us agree that David Cameron doesn’t have a clue what he’s doing, but one of his ideas that could have had merit is the famous ‘big society’, an idea which now seems to be dead. It could have been used to address wealth inequality without damaging our competitiveness. The ‘big society’ could be used to put pressure on the super wealthy by saying that they should put their hands in their pocket more often and help out the less well off by creating jobs, setting up clubs/services etc. Instead, it seems that by the ‘big society’, David Cameron meant cutting services mainly used/relied on by the poor to save money with no concern for how they could be replaced.
August 11, 2013
It is not so easy to compare Germany and the UK, merely by stats. I frequently holiday there, where I can get a good standard of accommodation for considerably less than in the UK. Certainly less in German cities than rooms from the same chains in Edinburgh or London. If I rent a room in one country at half the price of another, then that does affect the “GDP”, but it doesn’t render Germany half as “rich” as the UK.
Similarly in Restaurants. I get large portions in Germany. I pay a few Euros to park a car. Trains have the same fare for up to 5 persons in a group. I could go on.
Germany exports goods. It has a huge – mercantilist perhaps – trade surplus. We run a deficit. In the long run they will be stacking up assets when we have sold all ours – to them amongst other creditor nations.
I wouldn’t crow about how wonderfully “well” we stack up against Germany.
Apples and pears there I would suggest.
August 11, 2013
Actually I am tired of all our cities. I would like to sell up and retire to another country where I don’t understand the language and couldn’t hear the abuse . We fight for every single penny , have the mick taken for effort and end up with very little. I have had enough of our broken country and the changelings which now occupy it. 2 children prevent me from living in the middle of a field somewhere in another country and fading away gently.
August 11, 2013
What would Liverpool have to do to join this ‘club’ ?!
August 12, 2013
Move all their most profitable businesses to one region of the city and move all the unprofitable parts somewhere else. This will dramatically increase the GDP per head.
August 13, 2013
Good rule of law, cleanliness, encourage enterprise, learn to speak English.
August 16, 2013
“are-eh, waara yer like ? erm, warra yer meen ?!
August 12, 2013
Can I just point out that it is possible to be a total Eurosceptic and also full of admiration for the way Germany orders its affairs? Amazing as London and Paris are, in a way the Germans are lucky they don’t have a dominant city. London is and has always been about financial liquidity, which has its benefits but has also taken us to the brink of disaster.
August 12, 2013
How do you measure GDP per head – by a small geographic area?
August 14, 2013
If City’s are the spearhead of growth, then what the UK surely needs is a second mega City to generate growth further up north. The closest we have to a 10 million population mega city outside of London, is the Liverpool – Manchester – Leeds area, which I think has close to 8 million people.
So how to get these separate Cities to act as an engine of growth. The closest to such a government led project in the recent past is the redevelopment of East London in preparation for the London Olympics. Is this the type of investment what is needed to pull in private sector investment and then growth?
Such plans are being worked on in China.
http://www.chinadaily.com.cn/china/2013-08/14/content_16891893.htm
Reply There have been various regeneration and public sector led improvement projects in the main northern cities, and a great deal has been spent on roads and rail. What we now need is a private sector led investment surge in these cities.